Solving tax problems for clients requires lots of interaction with the IRS. Generally, after meeting with a client, I file an authorization form so I can access their data online. Until last month, I filed those online, which presumably would have worked during the government shutdown. Now, we must fax them and wait 2-3 days for approval. Once I had accessed the taxpayer’s transcripts online, I usually call and speak to the IRS, asking for a collection hold, confirming details, and filing forms to resolve the issue.

Essentially, the vital services we perform for taxpayers are on hold. It’s been tough for my clients so here’s what I’ve found out and experienced during the government shutdown.

New Tax Liens and Levies
Officially, new tax liens and levies are not being issued. However, some taxpayers have reported receiving Notices of Intent to Levy during the shutdown. According to reports, the notices will continue but the liens and levies are not being filed.

Regardless, with most of the IRS not available, our options are limited. With my clients, I am preparing overdue returns and getting ready to contact the IRS once they’re open. Since authorizations to access client data are not being approved, it definitely limits our ability to complete tax returns and get an accurate overview of client accounts.

Levies that were filed before the government shutdown are still a huge problem. Normally when a levy is filed, the bank freezes the money. Often, that’s when I get a call from a new client. We have 21 days to solve the tax problem and prevent the bank from sending the money seized to the IRS. We cannot do that, and it appears that banks are still required to forward the money to the IRS.

Ongoing Tax Issues
Basically, we’re in a holding pattern. Clients who are waiting for tax returns to be processed will have to wait longer, while interest and penalties accrue. Clients with garnishments are still having their wages reduced.

Missed Deadlines
Clients who are receiving automated notices with deadlines can miss those narrow windows if their response is not being processed. Will the IRS count the postmark date for these responses or will we have to file in Tax Court? It’s not clear at this point. The Tax Court is officially saying that petitions should still be filed to meet the 90-day deadline but will not be processed until the shutdown is over.

Filing Tax Returns on Extension
I would recommend filing taxes tomorrow electronically if possible. Paper returns take longer to process and the delays will increase this filing season once the IRS is back in business. For clients expecting a refund, they will not be issued until the government shutdown is over.

Looking Ahead
Once the IRS reopens, I expect increased delays while they process the backlog. If the government shutdown continues, preparing for next tax season could be very bumpy indeed.

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Wendy Litten, EA

4400 Route 9 South
Freehold, NJ 07728
(609) 259-0759

taxes@wendylitten.com

I’m Wendy Litten, EA. Everyday, I help my clients with filing personal and business tax returns and QuickBooks. However, with increased IRS activity, I’ve also been specializing in tax problem-solving, including IRS notices, back taxes, overdue returns, liens, offers in compromise and all types of IRS problems. Here, I will share my experiences and hope to help those in similar situations.